Swan under fire over 2011 jobs forecast

Treasurer
Wayne Swan
has come under renewed opposition pressure over his 2011 forecast that employers would generate 500,000 jobs by mid-2013, after the release of sluggish labour force data.

To reach that number, which is no longer the government’s forecast, jobs need to grow at almost three times the monthly average of the past decade.

Australian Bureau of Statistics figures showed payrolls rose in January by 10,400 from December, when they fell by a revised 3800.

The jobless rate confounded economists’ forecasts for a rise by holding at 5.4 per cent, in part because of lower participation.

Source: ABS
AFR

While the headline rate was positive, signs of underlying weakness included a rise in part-time employment and fewer full-time jobs, which may keep the Reserve Bank of Australia on the alert for further interest rate cuts.

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Mr Swan hit back, saying the government had adapted to the realities of the global economy, and accused the opposition of pretending the global financial crisis had never happened.

“Those opposite like to pretend that the global financial crisis never happened," Mr Swan told Parliament. “As a consequence of that – because it didn’t happen in their world, their alternative universe – they would have cut $160 billion from the budget."

In his budget speech in May 2011, Mr Swan said: “The unemployment rate is forecast to fall further, to 4.5 per cent by mid 2013, creating another half a million jobs". That forecast has subsequently been revised three times, according to his office.

Since it was made, Australia has been hit with a fresh bout of global turmoil, slower growth in China, falling business and consumer confidence, as well as the high dollar, limiting jobs growth to just 153,000 positions.

To reach Mr Swan’s 2011 forecast, employment would need to grow by almost 50,000 a month – well above the 17,600 average of the past 10 years.

“Given that the Treasurer has to create almost 350,000 jobs in just a few months to honour his 2011 budget commitment, it is increasingly clear that this will be yet another broken Labor promise," Mr Hockey said.

As debate about the budget and the economy dominated question time in Canberra for a third straight day, analysts labelled the January labour force data as soft.

Australia’s worst performer in January was Victoria, where the jobless rate jumped from 5.6 per cent to 6.1 per cent. That was offset by falling and stable unemployment rates in Queensland and NSW respectively.

“The economy has also suffered from a slowdown in the mining sector, which has led to a multiplier effect across the country as the industries that support mining, such as service, engineering and construction industries, have seen a slowdown as well," he said.

CommSec economist Savanth Sebastian said while jobs were being lost in some sectors, others were creating them.

“Overall it does seem like a fair proportion of Aussie businesses are holding onto existing staff, rather than culling staff or significantly adding to the workforce."

Full-time jobs fell 9800, while part-time employment increased 20,200. The participation rate edged lower to 65 per cent from 65.1 per cent, as fewer people looked for work, helping put downward pressure on the jobless rate. Hours worked fell.